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While much media focus has been on the potential of Virtual Reality (VR), AR has steadily been building momentum. You could go so far as to say that while VR is still mainly about promise, AR is already here. A fact underscored by companies spending up to $48.7 billion on AR hardware over the coming five years, soundly beating the expected $18.6 billion spent on VR hardware during the same period.

Deals mirror the factory floor

AR is already at work in manufacturing companies. However, it is worth noting its huge potential and the ongoing investment in AR technologies. Digi-Capital’s Augmented/Virtual Reality Report recorded $1.5 billion funding for AR/VR companies for the 12 months leading through Q1 2017, compared to $600 million of M&A for the same period. The relationship between funding and M&A is typical of immature industries characterised by rapid technological development. industries almost invariably undergo several rounds of consolidation, involving heightened M&A activity. Recent years has seen funding shift towards AR. I would expect that M&A activity will follow suit in the coming years.

A side note: CB Insights analysis shows how Chinese investors have been particularly busy in AR/VR. In the last year, they have participated in 36 deals worth a combined $1.2 billion of disclosed funding. A 71% growth in deals and 277% growth in funding. A similar trend exists in robotics. Both illustrate how Chinese manufacturing companies are looking to combat rising labour prices with investment in new technologies. Something that is likely to further boost funding and M&A for years to come.

With that, it is time to turn to look at AR’s use in manufacturing companies.

1. Maintenance

AR’s ability to overlay what a person sees with data, graphics and other kinds of information is central to its application in manufacturing industries. For example, it allows maintenance technicians to quickly access key information about a piece of equipment’s status while keeping both hands free.

Elevator manufacturer thyssenkrupp is using Microsoft’s HoloLens AR-system in various ways, including for maintenance. When a company technician services a lift, the person can call up visualisations of the different parts of the lift ahead of said job, and have remote, hands-free access to technical manuals and other relevant materials while working on the elevator.

Even experienced employees can find some assembly tasks daunting. Assembly of thousands of parts in the correct order often requires consulting manuals and checklists. This is time consuming compared to calling up the required information, as well as assembly instructions, via AR-technology.

AR can also be used for training staff in how to perform tasks. Aerospace company Pratt & Whitney is using AR technology in its training programs. It allows participants to go for a virtual stroll inside a running engine to examine parts and get an intuitive understanding of how the engine works.

Porsche has been trialling AR quality assurance. The system takes pictures of parts and assemblies via AR equipment. The images are then overlaid and compared with standard reference pictures. It provides an intuitive and informative way for workers/technicians to see if there are discrepancies between the two.

Whether talking about maintenance, assembly or other tasks, the ability to call on expert support can help resolve issues and problems much faster. Thanks to AR overlays, experts do not have to travel to a physical location to help fix an issue. Instead, they can give instructions, including drawing illustrations and presenting relevant documents/videos, to an on-site colleague without ever leaving their own office.

The cumulative effect of AR is measurable efficiency improvements. Speeding up processes like training, quality assurance and maintenance, help manufacturing companies create competitive advantages. While the higher efficiency is measurable on single task level, its compound effect on repetitive tasks is profound.

For example, GE technicians using AR when checking wiring of a wind turbine’s control box improved performance by 34% on first use. If you have a wind farm with 100 wind turbine generators, that equals a lot of saved man-hours.